Tuesday, August 24, 2010

Poor Christina Romer, Part II

Christina Romer has resigned as chairman of the president's Council of Economic Advisors and now will be on his Economic Recovery Advisory Board - whatever that is. As chairman of the CEA, she took a back seat to Larry Summers, the president's economic advisor. Now why the chairman of the CEA isn't the president's economic advisor is a mystery to me but so be it. As chairman of the CEA, Romer was forced to advocate policies that were contrary to her economic research, stand before cameras putting on a happy face and lying through her teeth. Consider this, her research shows that Roosevelt's sharp rising of taxes and increased government spending prolonged and deepened the Great Depression. Now while we are in the Great Recession, she has been smilingly advocating positions of the administration that raise taxes and increase spending. Her work on taxation shows that increases in taxes lower GDP - not a position exactly in concert with the administration. Lastly her work with the so-called Keynesian multiplier (where somehow increases in government spending lead to a greater increase in GDP) were always less than the CEA forecasts and of course much less than the multipliers found by Bob Barro (which are negative). Now that she is leaving the administration, I wonder if she will start speaking the truth in the Economic Recovery Advisory Board and leave the lying to Jared Bernstein who remains on the CEA?

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